Guarantee Fee Agreement Template for Canada

The Guarantee Fee Agreement is a crucial document used when one party (the Guarantor) provides a guarantee in favor of another party and receives fees in return for this service. This agreement is commonly used in Canadian business transactions where financial guarantees are required, such as parent company guarantees, bank guarantees, or corporate guarantees. The document establishes the commercial terms of the guarantee arrangement, including fee calculation methods, payment schedules, and parties' obligations, while ensuring compliance with Canadian federal and provincial regulations. It's particularly important in corporate group structures, project finance, and international trade transactions where guarantees are essential for business operations. The agreement must align with Canadian banking regulations, tax laws, and provincial contract law requirements to ensure enforceability and proper treatment of the guarantee fees.

1. Parties: Identifies and defines the parties to the agreement - typically the Guarantor (who provides the guarantee), the Beneficiary (who pays the fee), and any other relevant parties

2. Background: Sets out the context of the agreement, including reference to the underlying guarantee arrangement

3. Definitions: Defines key terms used throughout the agreement

4. Guarantee Fee: Specifies the fee amount or calculation method, including any variations based on guarantee amount or risk

5. Payment Terms: Details the timing and method of fee payments, including payment frequency and acceptable payment methods

6. Obligations of the Parties: Outlines the specific obligations of both the Guarantor and the Beneficiary

7. Term and Termination: Specifies the duration of the agreement and circumstances under which it can be terminated

8. Representations and Warranties: Sets out the statements of fact and promises made by each party

9. Confidentiality: Provisions regarding the treatment of confidential information

10. Notices: Specifies how formal communications between parties should be made

11. Governing Law: Specifies that Canadian law governs the agreement

12. General Provisions: Standard boilerplate clauses including entire agreement, amendments, and severability